Link: Whitehall farce over new CO2 tax
The department of trade last week published a consultation document on the European Union’s emissions trading scheme, due to come into force in January 2005. The scheme sets caps on emissions for businesses known to produce high levels of CO2, such as electricity generators and steel producers. Those that produce levels of greenhouse gases below their cap are then allowed to trade their surplus with companies likely to exceed their limits.
The consultation is aimed at defining how the UK cap will be distributed among organisations producing CO2. The scheme is a major step towards the government’s target of reducing greenhouse gases by 60% by 2050.
Earlier this year, the International Accounting Standards Board published a draft document on how companies involved in schemes where emission rights are granted should account for these rights under current international standards.
However, it has not been universally welcomed. The ICAEW has registered its objections to the proposals and is calling for the IASB to change its standards in order to remove the need for interpretation. The interpretation, said the ICAEW, caused a mismatch of gains and losses in the profit and loss account under current rules, while others would stop it recognising a change in value for these rights.
‘There are unacceptable consequences of the interpretation under current standards,’ said Nigel Sleigh-Johnson, head of financial reporting at the ICAEW. ‘These are fundamental issues that can’t be fixed by interpretations and need amendments.’